LOS ANGELES & NEW YORK--(BUSINESS WIRE)--Kravitz today released the 2013 National Cash Balance Research Report, showing a 500% increase in new plans over the decade and a 12% increase for the most recent year. The growth of Cash Balance Plans continues to surpass all other sectors of the retirement plan market, including 401(k) plans, which declined 3% in the same period.
There were 7,926 Cash Balance Plans active in 2011 (the most recent year for which complete IRS reporting data is available), up from 1,337 in 2001. There are 11.1 million participants in Cash Balance Plans nationwide, with $724 billion in assets. Cash Balance plans now make up 20% of all defined benefit plans, up from 2.9% in 2001.
“With 401(k) contributions limited to $17,500 a year and tax rates rising, Cash Balance Plans offer welcome relief for business owners who need to increase tax-deferred retirement savings,” said Dan Kravitz, President of Kravitz. “Many owners can dramatically accelerate their savings rate, while offering an enhanced employee benefit package that helps attract and retain top talent.”
Also known as “hybrid” plans, Cash Balance Plans combine the high contribution limits of traditional defined benefit plans with the flexibility and portability of a 401(k).
Key findings from the 2013 National Cash Balance Research Report:
- Companies more than double contributions to employee retirement savings when adding a Cash Balance Plan: the average employer contribution to staff retirement accounts is 6.2% of pay in companies with both Cash Balance and 401(k) plans, compared with 2.5% of pay in firms with 401(k) alone.
- Small businesses continue to drive Cash Balance growth: 86% of Cash Balance Plans are in place at firms with fewer than 100 employees.
- Top 10 lists highlight strategic importance of Cash Balance Plans at Fortune 100 companies and professional service firms: many leading national law firms and medical groups offer Cash Balance Plans, along with a number of Fortune 100 companies. Our report includes Top 10 lists of the largest plans by asset size and sector.
- The 30-year Treasury rate remains the most popular Interest Crediting Rate (ICR): while the 2010 Cash Balance regulations introduced a wider range of allowable ICR options, most plan sponsors have stayed with the 30-year Treasury safe harbor rate to avoid unexpected cost issues with the new ICR options.
These and many other highlights of the 2013 National Cash Balance Research Report will be discussed in an upcoming live webinar led by Dan Kravitz on Tuesday, July 9. Registration is free and open to anyone interested in learning more about Cash Balance Plans.
Download the 2013 Cash Balance Research Report: http://cashbalancedesign.com/articles/documents/NationalCashBalanceResearchReport2013.pdf
Register for the Cash Balance Outlook 2013 webinar: https://www2.gotomeeting.com/register/842263754
For more information, call Dan Kravitz at 818-379-6162 and visit www.CashBalanceDesign.com.
About Kravitz: Since 1977, Kravitz has brought its clients the latest in design, administration, and management of corporate retirement plans. The company designed its first Cash Balance Plan in 1989. Today Kravitz administers over 1,200 plans, including more than 400 Cash Balance Plans, helping over 150,000 people retire successfully. Headquartered in Los Angeles, Kravitz has offices in New York and satellite offices in nine states. Visit www.CashBalanceDesign.com.